Have no doubt, despite the claims of propagandists, the foreclosure documentation crisis is not nitpicking. Providing the court with affidavits with unverified information is fraud: were you or I to do this, we would go to jail. One of Yves Smith’s commenters describes this in more detail:
An affidavit is a legal document which can substitute for live witness testimony in court. All testimony in court is governed by the rules of evidence or by statute. All testimony requires that the witness swears to tell the truth, is competent and has personal knowledge of the facts they are testifying about. An affidavit is no different, in most if not all jurisdictions; the affiant swears to tell the truth by being placed under oath by the notary, the affiant states in the affidavit that they were sworn, are competent and that they have personal knowledge of the facts in the affidavit. The notary attests to the oath of the affiant and that the affiant is who he claims to be.
If a witness lies in court or in an affidavit then they could be charged with perjury. Perjury is lying to the court.
…Lying to the court is not a paperwork problem. Attorneys are prohibited from making a material misrepresentation to the court of fact or law. Further, attorneys in most jurisdictions have an affirmative duty to report known perjury by their clients to the court….
This country cannot stand as a democracy if there is one set of law for the banks, corps, elites and another set of law for the rest of us. Perjury and fraud on the court is very serious matter. It is not a mere paperwork problem.
In other words, this is massive interstate serial perjury and fraud. So why would the various parties involved submit false claims before the court? While I’m fond of the null hypothesis of “banks are assholes”, the amount of exposure here is quite staggering.
Ellen Brown provides two possible reasons–and I think both were involved. First, she links to Karl Denninger who argues that the sellers of REMICs–the large pools of bundled mortgages–intentionally confused title issues so the buyers of REMICs couldn’t understand how crappy and risky the underlying mortgages were (i.e., a chunk of Big Shitpile).
The second option has to do with the financial alchemy that enabled the least crappy parts of the bundles of crappy mortgages to be relabeled as AAA (high quality) products–also known as tranching (boldface mine):
The top tranche is triple A because it includes the mortgages that did NOT default; but no one could know which those were until the defaults occurred, when the defaulting mortgages got assigned to the lower tranches and foreclosure went forward. That could explain why the mortgages could not be assigned to the proper group of investors immediately: the homes only fell into their designated tranches when they went into default. The clever designers of these vehicles tried to have it both ways by conveying the properties to an electronic dummy conduit called MERS (an acronym for Mortgage Electronic Registration Systems), which would hold them in the meantime. MERS would then assign them to the proper tranche as the defaults occurred. But the rating agencies required that the conduit be “bankruptcy remote,” which meant it could hold title to nothing; and courts have started to take notice of this defect. They are concluding that if MERS owns nothing, it can assign nothing, and the chain of title has been irretrievably broken.
In other words, if I bought a AAA-rated piece of Big Shitpile, I had no idea what specific mortgages I actually owned until some mortgages went bad (i.e., foreclosure), and were only then assigned to various securities.
In both scenarios (and they are not mutually exclusive), a broken chain of title was essential, and not accidental, since ownership of the underlying mortgages had to remain obscure. But the whole scheme was predicated on the assumption that no one would challenge the foreclosures, which, if the problem had remained limited to poor people with limited legal recourse, was probably a good assumption. However, the problem metastasized–and thanks to these very same banks getting greedy and opposing legislative solutions such as cramdown–so people started fighting the foreclosures.
And now we’re all screwed.